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The Week in Business: Attempts to Prop Up the Russian Economy – The New York Times

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Till Lauer

President Vladimir V. Putin of Russia said last week that he would require “unfriendly countries” to pay for Russian gas in rubles. The move was intended to force countries like the United States and Britain to prop up Russia’s currency, which crashed after sanctions targeting Russia’s central bank effectively froze hundreds of billions of dollars of assets. People, in turn, rushed to exchange their rubles for dollars or euros. Officials in Europe and experts in the United States have already rejected the idea of paying in rubles. In another attempt to mitigate economic ruin, the Russian stock market reopened for limited trading on Thursday after a monthlong shutdown. The MOEX index rose 4.4 percent, but this upward trend was probably because of government measures aimed at avoiding a sell-off.

The Federal Reserve chair, Jerome H. Powell, foreshadowed the central bank’s more aggressive approach to inflation, speaking urgently last week about the Fed’s willingness to take additional measures to ease demand and curb record inflation. His comments followed the Fed’s decision to increase its key interest rate by a quarter of a percentage point, the first of several increases the Fed is now projecting for 2022. “If we conclude that it is appropriate to move more aggressively by raising the federal funds rate by more than 25 basis points at a meeting or meetings, we will do so,” Mr. Powell said last Monday. In Britain, where inflation is at a three-decade high, officials announced measures on Wednesday to help people cope with the rising prices, including plans to cut taxes on gasoline and diesel and release more funds to support low-income households.

The Biden administration made two moves to roll back tariffs imposed by President Donald J. Trump that sought to limit trade with Britain and China. On Tuesday, the administration announced an end to Trump-era tariffs on British steel and aluminum. In return, Britain agreed to lift tariffs on a variety of American products including whiskey and blue jeans. The agreement removed some of the remaining trans-Atlantic trade tensions, which bubbled up under Mr. Trump. The next day, the Office of the United States Trade Representative said it would allow some Chinese products to bypass tariffs imposed during a trade war between Mr. Trump and Beijing.

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Till Lauer

The Securities and Exchange Commission has opened a comment period for a far-reaching rule that would require public companies to report their impact on the environment to shareholders and the federal government. The public can respond for 30 days after the proposed rule is published in the Federal Register or until May 20, whichever comes first. The rule is intended to inform shareholders about the risks that climate change may pose to a company’s bottom line, including whether consumers may lose interest in products or services that contribute to global warming. Advocates for the measure say it will hold companies accountable for how they affect the climate and give investors more leverage to nudge businesses toward more environmentally friendly practices. But the proposed rule is already facing opposition from some business trade groups and the prospect of potential court challenges.

Union drives continue to sweep Starbucks locations across the country, with employees in Seattle, the franchise’s hometown, and Mesa, Ariz., voting last week to unionize. The stores are the seventh and eighth locations to vote for unions. Since December, more than 100 Starbucks stores have filed for union elections. Amazon has been trying to fend off unions in two of its own elections: Employees in Staten Island were still casting their ballots, and voting ended on Friday in Bessemer, Ala. A union victory in either location would be a first for Amazon’s operations in the United States. There is special attention on Bessemer, where the union lost an election last year and Amazon was hit with complaints from the National Labor Relations Board for its activities during the union efforts. This time, Amazon has relied largely on mandatory meetings intended to discourage workers from supporting the union.

Last month’s jobs report showed a strong gain, with U.S. employers adding 678,000 jobs in February. The March report is also expected to be strong — though how strong will depend on the elasticity of demand, which has to do with whether factors like changing prices affect consumer behavior. The March report from the Department of Labor will not have registered any effects of the Fed’s rate increase, which was announced midway through the month. But the central bank’s moves will be a big caveat going forward as a potential recession looms large.

Germany released plans to drastically cut its dependence on Russian energy. Uber and New York City’s taxis formed a partnership. The European Union approved sweeping legislation to regulate the biggest tech companies. And the billionaire MacKenzie Scott has donated $12 billion to 1,257 groups since 2020.

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Economy

China Wants Everyone to Trade In Their Old Cars, Fridges to Help Save Its Economy

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China’s world-beating electric vehicle industry, at the heart of growing trade tensions with the US and Europe, is set to receive a big boost from the government’s latest effort to accelerate growth.

That’s one takeaway from what Beijing has revealed about its plan for incentives that will encourage Chinese businesses and households to adopt cleaner technologies. It’s widely expected to be one of this year’s main stimulus programs, though question-marks remain — including how much the government will spend.

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German Business Outlook Hits One-Year High as Economy Heals

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German business sentiment improved to its highest level in a year — reinforcing recent signs that Europe’s largest economy is exiting two years of struggles.

An expectations gauge by the Ifo institute rose to 89.9. in April from a revised 87.7 the previous month. That exceeds the 88.9 median forecast in a Bloomberg survey. A measure of current conditions also advanced.

“Sentiment has improved at companies in Germany,” Ifo President Clemens Fuest said. “Companies were more satisfied with their current business. Their expectations also brightened. The economy is stabilizing, especially thanks to service providers.”

A stronger global economy and the prospect of looser monetary policy in the euro zone are helping drag Germany out of the malaise that set in following Russia’s attack on Ukraine. European Central Bank President Christine Lagarde said last week that the country may have “turned the corner,” while Chancellor Olaf Scholz has also expressed optimism, citing record employment and retreating inflation.

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There’s been a particular shift in the data in recent weeks, with the Bundesbank now estimating that output rose in the first quarter, having only a month ago foreseen a contraction that would have ushered in a first recession since the pandemic.

Even so, the start of the year “didn’t go great,” according to Fuest.

“What we’re seeing at the moment confirms the forecasts, which are saying that growth will be weak in Germany, but at least it won’t be negative,” he told Bloomberg Television. “So this is the stabilization we expected. It’s not a complete recovery. But at least it’s a start.”

Monthly purchasing managers’ surveys for April brought more cheer this week as Germany returned to expansion for the first time since June 2023. Weak spots remain, however — notably in industry, which is still mired in a slump that’s being offset by a surge in services activity.

“We see an improving worldwide economy,” Fuest said. “But this doesn’t seem to reach German manufacturing, which is puzzling in a way.”

Germany, which was the only Group of Seven economy to shrink last year and has been weighing on the wider region, helped private-sector output in the 20-nation euro area strengthen this month, S&P Global said.

–With assistance from Joel Rinneby, Kristian Siedenburg and Francine Lacqua.

(Updates with more comments from Fuest starting in sixth paragraph.)

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Parallel economy: How Russia is defying the West’s boycott

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When Moscow resident Zoya, 62, was planning a trip to Italy to visit her daughter last August, she saw the perfect opportunity to buy the Apple Watch she had long dreamed of owning.

Officially, Apple does not sell its products in Russia.

The California-based tech giant was one of the first companies to announce it would exit the country in response to Russian President Vladimir Putin’s full-scale invasion of Ukraine on February 24, 2022.

But the week before her trip, Zoya made a surprise discovery while browsing Yandex.Market, one of several Russian answers to Amazon, where she regularly shops.

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Not only was the Apple Watch available for sale on the website, it was cheaper than in Italy.

Zoya bought the watch without a moment’s delay.

The serial code on the watch that was delivered to her home confirmed that it was manufactured by Apple in 2022 and intended for sale in the United States.

“In the store, they explained to me that these are genuine Apple products entering Russia through parallel imports,” Zoya, who asked to be only referred to by her first name, told Al Jazeera.

“I thought it was much easier to buy online than searching for a store in an unfamiliar country.”

Nearly 1,400 companies, including many of the most internationally recognisable brands, have since February 2022 announced that they would cease or dial back their operations in Russia in protest of Moscow’s military aggression against Ukraine.

But two years after the invasion, many of these companies’ products are still widely sold in Russia, in many cases in violation of Western-led sanctions, a months-long investigation by Al Jazeera has found.

Aided by the Russian government’s legalisation of parallel imports, Russian businesses have established a network of alternative supply chains to import restricted goods through third countries.

The companies that make the products have been either unwilling or unable to clamp down on these unofficial distribution networks.

 

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